Sale of MGM cinemas opens

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The Independent Online
Credit Lyonnais, the troubled state-controlled French bank, yesterday officially opened the doors to buyers for the MGM European cinema business it inherited after loans it made to the MGM studio group went sour in 1992. The MGM cinema chain encompasses 526 screens housed in 150 locations in the UK, the Netherlands and Denmark. It could be worth more than £200m.

There may be monopoly problems, however, if the British side of the business is sold to a single buyer. MGM has 120 cinemas in the UK and accounts for around 25 per cent of box office receipts.

Rank Organisation, owner of the Odeon chain, has already put its hat in the ring, but industry observers believe the sale of MGM may attract other companies with only a small presence in the UK market.

Recent speculation about potential suitors has included Steven Spielberg, Jeffrey Katzenburg and David Geffen, who recently formed a production studio, National Entertainments. United Cinemas International and Warner Bros have also been tipped as possible buyers.

The decision to sell now co-incides with the continuing revival of the cinema, which has discarded its "flea-pit" image and fought back against the boom in home videos by building entertainment complexes, typically encompassing five or more screens, withrestaurants and bars.

In the UK, MGM has 18 multiplex and 102 traditional cinema sites. Two more multiplexes are under construction and advanced negotiations are taking place on a further four. Another 25 possible sites are being considered.

MGM is also the market leader in the Netherlands, claiming almost 30 per cent of box office receipts from 21 cinemas, and in Denmark, where it has a 34 per cent share of the market through operating nine cinemas in a joint venture with Nordisk Film, the distributor.

The multiplex concept has just been transported to the Netherlands by MGM, which opened the country's first multi-screen cinema at Maastricht. Three more are under construction.

Most of MGM's earnings come from the UK, which earned pre-interest profits of £19.2m from sales of £106.7m in 1993. Figures for 1994 are not yet available.